Fare go: tribunal looks at cutting taxi rates to boost patronage

Jacob Saulwick -Feb 26, 2013

Taken for a ride ... the cost of catching a taxi in Sydney was cheaper than catching one in Stockholm, London, Paris and Amsterdam. Photo: Louise Kennerley

TAXI travel in Sydney is among the most expensive in the world, according to the Independent Pricing and Regulatory Tribunal (IPART), which is considering a recommendation that the government cut fares by 2.5 per cent.

IPART supports an overhaul of Sydney's taxi economy, presenting evidence that fares are too high, preventing more people catching cabs, and drivers paid too little. Instead, a large share of fare revenue goes to the owners of taxi licences and networks.

The 2.5 per cent fare reduction is one of four options proposed by the tribunal in an issues paper released on Monday.

Other options include making no change to fares; to increase fares in line with inflation; or lift fares in line with a measure called the Taxi Cost Index.

"What we've seen over the past few years is taxi fares going up, making them less affordable and increasing the reluctance of potential passengers to choose taxis over other transport options," the tribunal chairman, Peter Boxall, said.

"But while fares have increased, the incomes of taxi drivers and operators have remained low, with indications that additional revenue has gone to licence plate owners through higher plate lease fees, rather than to drivers and operators.

"There is little evidence to suggest at this stage that a further fare increase would benefit drivers, operators or passengers."

IPART will make its final recommendation before July, but the O'Farrell government is ultimately responsible for setting fares.

In its paper, IPART showed that the average taxi in Sydney makes about $160,000 a year. This is split between two drivers ($32,600 each), running costs ($46,500), the licence owner ($28,200), the taxi network ($7500) and the operator ($9600).

And despite increases in fares over the past 10 years that have outstripped inflation, the returns to drivers have remained grim. Drivers earn about $11 an hour. Holders of licences, on the other hand, have enjoyed returns in the past decade outstripping the share and property markets.

The paper also presented evidence that Sydney taxis are among the world's most expensive. When judged against the cost of other goods in each city, the cost of catching a taxi in Sydney at 9am for 15 kilometres was cheaper only than catching one in Stockholm, London, Paris and perhaps Amsterdam, in a selection of 15 cities selected by IPART.

IPART is also considering increasing the cost of taxis on Friday and Saturday nights, to encourage more drivers to work at these times.

The chief executive of the NSW Taxi Council, Roy Wakelin-King, said the council would be making a submission to IPART.

''We want to make sure the process is transparent and rigorous; the process in the past has been fair and transparent and rigorous,'' Mr Wakelin-King said.

The head of the Australian Taxi Drivers Association, Michael Jools, said the problem with the industry was that passenger numbers were declining.

''Decreasing fares will only have the impact of reducing taxi driver earnings even more,'' Mr Jools said.

The Transport Minister, Gladys Berejiklian, encouraged the public to make submissions to the review.